ARKANSAS DEVELOPMENT FINANCE AUTHORITY

SINGLE FAMILY

Homeownership Programs

Guidelines

ADFA “Move-Up”

Down Payment Assistance (DPA)

Arkansas Dream Down-payment Initiative (ADDI)

Mortgage Credit Certificate (MCC)

900 West Capitol Ave, Suite 310

Little Rock, AR 72201

https://homeloans.arkansas.gov

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Eligible Property Types

Single Family Detached: 1-Unit Primary Residences

Planned United Developments (PUDs): Townhomes or Condos

Manufactured Housing: Permitted by VA, FHA, or RD Program Guidelines.

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03/04/2019

PROGRAM GUIDELINES Loan Term Freddie Mac HFA Advantage (Conventional):

Fixed Rate / 30 Year Amortization / Purchase Only

Government Loans, VA, RD, FHA:

Fixed Rate / 30 Year Amortization / Purchase Only

Master Server ServiSolutions— A Division of the Alabama Housing Finance Authority:

In Alabama: 334.244.9200 Toll-free: 800.325.2432 FAX: 334.244.9214

Eligible Borrower Freddie Mac HFA Advantage (Conventional):

Freddie Mac allows for ownership in other property without restrictions, as October 2018.

Primary Residence only.

Governmental Loans:

Follow each specific program guidelines.

Primary Residence only.

Down Payment

Assistance Program

DPA—2nd Mortgage: 10-year term, interest rate matches 1st Mortgage

Borrowers are able to receive up to $10,000 for down payment assistance, cash back at closing

for POC items, and plus additional $100.

Can not be used for repairs or to pay debt to qualify.

Borrowers may increase down payment thus reducing 1st Mortgage amount.

ADDI—Soft 2nd Mortgage: 5-year term, forgiven at 1/60th per month

Borrowers are able to receive 10% of purchase price, up to $10,000.

Can receive cash back at closing for POC items.

Can not be used for repairs, principal reduction, or to pay debt to qualify.

HQS Inspection required.

DPA and ADDI cannot be combined. Neither ADDI nor DPA are available independently without an

ADFA “Move-Up” 1st Mortgage.

First-Time Homebuyer No first-time homebuyer requirement for MOVE-UP, 1st Mortgage Loan; DPA, 2nd Mortgage Loan; or

ADDI, Soft 2nd Mortgage Loan.

Borrowers can own other properties per Freddie Mac HFA Advantage requirements. See Homebuyer

Education on page 3.

See ADFA Mortgage Credit Certificate Programs for additional information.

“ MOVE“ MOVE--UP ”UP ”

1st Mortgage Loan with Down Payment Assistance (DPA) or

Arkansas Dream Down-Payment Initiative (ADDI)

7460 Halcyon Pointe Drive, Suite 200

Montgomery, AL 36117 P.O. Box 242967

Montgomery, AL 36124-2967

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PROGRAM GUIDELINES Affordable Income

Subsidy Grant (AIS)

Borrowers at or below 50% of the Area Median Income (“AMI) Limits as published by Freddie mac are

eligible for an AIS grant in the amount of $2,500 and borrowers above 50% of AMI but at or below

80% AMI are eligible for an AIS Grant of $1,500. AIS Grant funds must be reserved.

Income limits for the AIS Grant are determined by the county location of the home:

Home Possible Income & Property Eligibility

There is no repayment of the AIS Grant—it is a grant subsidy. The gran can be applied to the bor-

rower’s down payment and/or closing cost. No Cash back.

If the borrower qualifies, they may receive the AIS Grant, ADFA Down Payment Assistance or

ADFA Arkansas Dream Down payment Initiative, and a Mortgage Credit Certificate. These pro-

grams are stackable.

A reservation must be made separately for the AIS Grant, after reserving the 1st Mortgage.

AIS Grant funds might be use for down payment, closing cost, and pre-paid items only.

MCC will not be included/calculated as qualifying income for the AIS Grant.

Must be disclosed separately as “AIS” in Section L of Closing Disclosure.

The AIS Grant should be shown as a GIFT (AIS Grant) on the 1003

Maximum Loan-To-Value

(LTV) & Total-Loan-To-

Value (TLTV)

Follow each Program Guidelines for specific Maximum Loan-to-Value & Total-Loan-To-Value for gov-

ernment backed loans.

Freddie Mac HFA Advantage Conventional Loan:

Homebuyer Education Borrower (s) is required to take an 8 hour pre-purchase homebuyer education class or an e-home

online course through a HUD-Approved homebuyer counseling agency when using ADDI.

Online, 50% OFF, self-paced course:

HUD-Approved Homebuyer Education Online Course

While using ADDI, both borrowers must take the homebuyer education course. On a Freddie Mac

Conventional Loans if both borrowers are first time homebuyers, at least one borrower is required to

take the course. DPA, itself, does not have an education course requirement.

MCC Eligible Yes (First-time homebuyer purchase only). ADDI funds may be used for MCC fees.

See ADFA Mortgage Credit Certificate Programs, page 10, for additional information.

Income Limits Freddie Mac HFA Advantage Conventional—No Income Limits.

DPA—No Income Limits.

ADDI—Household income limits apply by county: HUD HOME Program Income Limits.

“ MOVE“ MOVE--UP ”UP ”

1st Mortgage Loan with Down Payment Assistance (DPA) or

Arkansas Dream Down-Payment Initiative (ADDI)

Maximum LTV Ratio Maximum TLTV Ratio

97 % 105%

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FHA VA RD HFA ADVANTAGE

CONVENTIONAL

DTI 45% 45% 45% 45%

03/04/2019

PROGRAM GUIDELINES Rate Rate is set daily and sent to all participating lenders. Rate subject to change without notice.

DPA—Matches 1st Mortgage Rate (ADFA Move-Up).

ADDI—Not applicable.

Minimum Credit Score

ADDI—has no credit score requirements. ADDI must be paired with ADFA Move-Up. Move-Up

has credit score requirements.

Eligible Purpose Single family detached , 1-Unit Primary Residence, and PUDs (Condos & Townhomes).

VA, FHA, RD or Freddie Mac Advantage Conventional loans types allowed.

Manufacturing housing allowed on FHA, VA or RD Loans ONLY.

Borrower (s) can own other property.+

**ADDI nor DPA are eligible for refinancing**

+ See Eligible Borrower section on page 2 for additional information.

See ADFA Mortgage Credit Certificate Program for additional information.

Purchase Price / Sales

Price

DPA—Arkansas Conventional Conforming Loan Limit—$484,350 (no jumbo)

ADDI—Purchase Price Limit of $250,000

Non-Occupant

Borrowers

Co-Signers

Non-Occupant borrowers Co-Signers allowed only on FHA Loans.

Co-Signers must sign the Note, and TRID Documents only. Cannot take title or be on the

Warranty Deed.

ADFA does not request income documents on the Co-Signer.

Debt-To-Income Ratio

Maximum (DTI)

“ MOVE“ MOVE--UP ”UP ”

1st Mortgage Loan with Down Payment Assistance (DPA) or

Arkansas Dream Down-Payment Initiative (ADDI)

FHA VA RD HFA ADVANTAGE

CONVENTIONAL

CREDIT SCORE 660 640 640 640

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PROGRAM GUIDELINES Manufactured Housing Manufactured housing is allowed only on government loan products guidelines (FHA, VA, USDA) to

each specific program, and subject to the State of Arkansas, the following guidelines apply:

The manufactured home must be attached to the land.

The manufactured home must be classified and taxed as real estate.

In accordance with the jurisdictional requirements, the manufactured home title must be surren-

dered/cancelled (copy of the cancellation must be provided at the time of loan purchase by

ServiSolutions)

State of Arkansas Manufactured Housing Requirements

Page 34:

ServiSolutions Loan Delivery & Purchase Guidelines

Required Lien Perfection Documentation

Collection of a DMV retirement confirmation document: Confirmation Letter from the AR Depart-

ment of Finance & Administration stating the mobile home certificate of title has been cancelled.

See Manufactured Housing Requirements for each Program:

FHA Manufactured Homes

USDA Manufactured Homes

VA Manufactured Homes

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1st Mortgage Loan with Down Payment Assistance (DPA) or

Arkansas Dream Down-Payment Initiative (ADDI)

MINIMUM

CREDIT SCORE

MAXIMUM

DTI

MAXIMUM

LTV

MAXIMUM

CLTV

640 (660; FHA) 45% Per Program Guidelines

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PROCEDURES Lock-In ALL program reservations and rate Lock-Ins are from 9:00 am to 7:00 pm, Monday– Friday with

exception of ADFA holidays. https://adfa.mitas.com/mitas/

Origination Loan originated in accordance with program guidelines, Freddie Mac guidelines, and LPA recommen-

dations. (Running Loan Product Advisor as soon as possible is suggested).

No ADFA Exhibits required for origination.

Tax Transcripts / Tax

Returns

If Requested:

Most recent tax transcripts required for all the borrowers.

Self-employed, last 2 years tax returns required.

Credit Fees in Price No Credit Fees in Price.

Reservations ALL program reservations are from 9:00 am to 7:00 pm

May be reserved or ‘locked’ at application in our Reservation System, keep in mind the following:

Close loan within 30-days of reservation.

Loan will be cancelled if not closed within 45 days. Closing Package reviewed by ADFA.

70-day purchase timeline remains in effect from date loan is reserved or ‘locked’ in our Reserva-

tion System.

If ADFA has not received a closing package within 70 days of the reservation date, the res-

ervation will automatically be cancelled unless notified by the lender that an extension is

needed. If ADFA has received a closing package then the 30 day extension will automatically go

into effect and the $375 extension fee will be netted out at purchase.

If ADFA is notified that an extension is needed and the loan ends up cancelling after 70 days the

extension fee will still be collected by ADFA.

Loan Product Advisor HFA Advantage through Loan Product Advisor (LPA)

LPA with “ACCEPT” recommendation is required.

LPA A Minus Offering is not allowed.

ADDI & DPA: Affordable 2nd Mortgage

**Manual Underwriting is not allowed**

Buydowns Freddie Mac HFA Advantage Conventional & Government: Not Permitted.

Assumable Freddie Mac HFA Advantage Conventional: Not Permitted.

Government: Permitted per FHA, VA, or RD Guidelines.

Escrow Waivers Freddie Mac HFA Advantage Conventional & Government: Not Permitted.

MCC Eligible Yes (first-time homebuyer purchase only).

See ADFA Mortgage Credit Certificate Programs for additional information.

“ MOVE“ MOVE--UP ”UP ”

1st Mortgage Loan with Down Payment Assistance (DPA) or

Arkansas Dream Down-Payment Initiative (ADDI)

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03/04/2019

PROCEDURES Fees Delivery fees netted out at purchase:

$200—Funding Fee

AHFA will implement a Funding Fee to be paid by the Lender at time of loan purchase (via net fund-

ing) beginning on January 2, 2019 (reservations dated 1/2/2019). This fee is paid directly by the lend-

er and net funded at time of loan purchase. It is not to be charged to the borrower.

$71.50—Tax Servicing Fee

(ADFA pays 1.75% SRP on Conventional, FHA and RD loan; and 1.25% SRP on VA loans when sold

to the Master Servicer).

DPA:

No Fees

ADDI:

No Fees

Borrowers are able to receive cash back at closing to cover POC items.

ADFA pays for up to two HQS Inspections. Any additional inspections cannot be paid by the borrower.

(Initial & Final Inspection: $125 per inspection plus 42¢ per mile)

See ADFA Mortgage Credit Certificate (MCC) Program for additional fees when using this program.

HQS Inspection DPA:

No HQS Inspection required.

ADDI:

U.S. Department of Housing & Urban Development requires HQS Inspection.

Lender is allowed to pick its own inspector (Business License & W-2 must be approved).

ADFA pays for Initial & Final Inspection (up to $125 + millage for each inspection).

ADFA must dispatch inspectors in order to pay them.

When using ADDI, please allow up to 45 days for closing. See ADFA ADDI

Closing Loans closed in accordance with standard Freddie Mac guidelines.

DPA:

Compliance submission package no longer required.

Awards letter sent prior to closing (award.letters@adfa.arkansas.gov)

ADDI:

Most current year tax returns with W-2’s, signed by borrower (s) unless self-employed.

Self-employed borrower (s) required 2 years signed tax returns, W-2/1099’s and YTD P&L.

Awards letter sent prior to closing (award.letters@adfa.arkansas.gov)

“ MOVE“ MOVE--UP ”UP ”

1st Mortgage Loan with Down Payment Assistance (DPA) or

Arkansas Dream Down-Payment Initiative (ADDI)

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03/04/2019

PROCEDURES Funding Originating lender will fund the 1st mortgage and 2nd mortgage at closing.

Points & Fees ADFA is exempt from ATR-QM (Ability to Repay and Qualified Mortgage Rule)

Delivery Loans must be bought by ServiSolutions within 70 days from loan reservation to avoid exten-

sion fee of $375.

Documents must be uploaded using MITAS as a whole with separated cover scan sheets (preferred),

or individually.

Uniform Closing

Dataset (UCD)

ServiSolutions requires a Freddie Mac UCD findings report in every Conventional Loan file. The re-

port must reflect “successful result” with transfer to AHFA. An embedded CD and no Fatal Error

Edit warnings.

Documents ADFA:

DPA

1. Copy of DPA final loan application signed and dated by borrower and lender.

2. Copy of DPA Final Closing Disclosure signed at closing.

3. Copy of DPA Note.

4. Copy of Subordinate Mortgage.

5. Copy of Homeowners Insurance (ADFA listed as 2nd mortgagee).

ADDI

1. Original ADDI Note.

2. Copy of recorded ADDI Subordinate Mortgage / Copy of un-recorded.

3. Copy of recorded ADDI Mortgage Subsidy Deferred Note Agreement / Copy of un-recorded.

4. Copy of Homeowners Insurance (ADFA listed as 2nd mortgagee).

Appraisal Requirements Freddie Mac HFA Advantage Conventional: Full Interior and Exterior Appraisal required; SSR from

FMNA/FHLMC with successful results is required.

Government Loans: Full Interior and Exterior Appraisal required; FHA EAD report with successful

result required.

Mortgage Insurance

Coverage

(HFA Advantage

Conventional)

Freddie Mac HFA Advantage Conventional monthly mortgage insurance automatically ends when

LTV drops to 78%. Single Premium, available, coverage is Life of Loan with no additional cost.

Single Premium Mortgage Insurance is allowed, it can be paid by the borrower, Lender or Seller. If

it is paid by the Lender or Seller it must be included in the maximum interested party contribution of

3% of the sales price.

“ MOVE“ MOVE--UP ”UP ”

1st Mortgage Loan with Down Payment Assistance (DPA) or

Arkansas Dream Down-Payment Initiative (ADDI)

95% 97%

90.01% to 95% = 16%

85.01% to 90% = 12% 18%

80.01% to 85% = 6%

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03/04/2019

PROCEDURES Subordinate Financing Must be an approved Affordable Second. Lenders are responsible for verifying that the subordinate

financing used meets “accepted” recommendation.

Post-Closing Standard post-closing documents must be submitted to ADFA.

Original Recorded Documents must be submitted to ServiSolutions.

ADFA Compliance Team

Contact Information

ADFA Training

Resources

Arkansas Development Finance Authority

900 W Capitol Ave, Suite 310

Little Rock, AR 72201

(501) 682-5900

ADFA Forms, under Single Family.

Loan Delivery &

Purchase Guidelines

Link: ServiSolutions Loan Delivery & Purchase Guidelines

Miscellaneous The information contained herein (including but not limited to any description of ADFA programs and

products, eligibility criteria, interest rates, fees and all other loan terms) is subject to change without

notice. Participants are responsible to find the latest information and guidelines.

(The information contained in this product description does not modify, replace or substitute infor-

mation in the Fannie Mac Selling and Loan Product Advisor Guides and or related release notes or

supplements. Always check for Freddie Mac, ServiSolutions or ADFA announcements and updates

for current underwriting guidelines, changes and/or updates).

“ MOVE“ MOVE--UP ”UP ”

1st Mortgage Loan with Down Payment Assistance (DPA) or

Arkansas Dream Down-Payment Initiative (ADDI)

Denise Wells—Single Family Assistant Manager

(501) 682-5466

Denise.Wells@adfa.arkansas.gov

Virginia Wright—Single Family Compliance

(501) 682-5923

Virginia.Wright@adfa.arkansas.gov

Dean Norman—Single Family Compliance

(501) 682-5935

Dean.Norman@adfa.arkansas.gov

Leslie Quisenberry—Single Family Compliance

(501) 682-5930 Leslie.Quisenberry@adfa.arkansas.gov

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03/04/2019

PROGRAM GUIDELINES Term Credit may be claimed for the life of the loan, as long as the home is use as primary residence.

Purpose The Mortgage Credit Certificate was authorized by congress in 1984 Tax Reform Act to help lower-

income families afford a home. The program allows homebuyers to claim a dollar-for-dollar tax credit

for a portion of mortgage interest paid per year, up to $2,000.

The certificate is issued by ADFA and allows qualifying homebuyers to claim a tax credit of up to 50%

of the mortgage interest paid per year.

Amount Up to 50% of mortgage interest up to $2,000 tax credit per year that reduces the amount of federal

income tax paid by the borrower, giving more available income to qualify for a mortgage loan and

assist with house payments.

Tax Credit

Advantages Borrower may go to their employer and adjust their W-4’s to reflect the anticipated credit. This will

lower the borrower's federal tax withholdings and increase the monthly take home pay.

$2,000 Tax Credit ÷ 12 = $166.66 monthly results in additional income that can be used for qualifying

purposes.

First-Time Homebuyer First-time homebuyer is defined as a borrower who has NOT had an ownership interest in a

principal residence at any time during the three year period prior to the date of closing.

This ruling applies to a non-borrower spouse of any co-occupant.

“MORTGAGE CREDIT CERTIFICATE”“MORTGAGE CREDIT CERTIFICATE”

ADFA Mortgage Credit Certificate

Tax credit is equal to the

annual mortgage interest

paid multiplied by the

MCC tax credit rate of

50%.

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03/04/2019

PROGRAM GUIDELINES Qualifications At Least One of the following must be met:

Must be a first-time homebuyer (No principal residence ownership within last 3 years).

Veteran or Spouse of a Veteran.

Purchasing a home in a Targeted County.

Targeted County A targeted county is a qualified census tract or an area of chronic economic distress as designated by

the IRS. If property is located in a targeted country, the first time homebuyer requirement does not

apply.

IRS Filling Form 1040 “U.S. Individual Income Tax Return”— Borrower must claim the tax credit when filling

this form annually.

Form 8396 “Mortgage Interest Credit”— Borrower must use this form to claim this tax credit.

Borrower may itemize if preferred.

Income Limits /

Qualifying Income

Household income limits apply. Might be waived in targeted counties with prior ADFA approval.

MCC can be classified as “Other Income”.

Maximum Purchase

Price Limit

$270,000

Income Verification In non-targeted counties:

Most current year tax returns with W-2’s, signed by borrower (s) unless self-employed.

Self-employed borrower (s) required 2 years signed tax returns, W-2/1099’s and YTD P&L.

Non-Occupant

Borrowers /

Co-Signers

Can sign the LE, CD and Note only. Cannot take title or be on the Warranty Deed.

Can be on the LPA.

MCC Co-signers are allowed and do not meet the first-time homebuyer requirement if they are

not occupying the property. Anyone occupying the property must meet the first-time homebuyer

requirement and sign Exhibit I.

ADFA does not require income verification documents from co-signer.

Must be signed by the Borrower:

Exhibit A—Notice to Borrowers Potential Recapture

Exhibit B—Application for Conditional Commitment

Exhibit C—Disclosure

Exhibit I—Non-Borrower Occupant income Affidavit

“MORTGAGE CREDIT CERTIFICATE”“MORTGAGE CREDIT CERTIFICATE”

ADFA Mortgage Credit Certificate

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03/04/2019

PROGRAM GUIDELINES Fees $150—Lender Fee. Lender may charge up to $150 per each MCC transaction.

Issuance Fee—when using a participating lender’s fixed-rate and fully amortizing first mortgage 1/2%

(.50) of the loan amount as issuance fee will be charged for MCC. Payable to ADFA.

ADDI funds may be used for MCC fees. Other fees may apply if combining with any other ADFA Prod-

ucts.

Issuance Fee waived on MCC when using “ADFA Move-Up” 1st Mortgage Loan.

Issuance Fee waived on MCC when used without “ADFA Move-Up” 1st Mortgage Loan for Veterans,

or Spouse of Veteran ONLY (with Form DD214 required).

Eligible Purpose MCC is not eligible for refinance.

Documents 1. MCC Transmittal Checklist.

2. Copy of Loan Approval & Copy of Application.

3. Copy of Credit Report (non-targeted only).

4. Copy of Real Estate Contract.

5. Original Exhibit A, B, C, E, F, G, I, and P with County Income Limit Page.

6. Copy of Income Verification Documents.

7. Copy of Closing Disclosure.

Recapture Tax For the Recapture Tax to apply, ALL of the following conditions must be met:

Home is sold or disposed of within 9 years of being purchased, for reasons other than death, and

There is a capital gain on the sale of the home, and

Household income for the year in which you sell your home exceeds at least 5% each year, which

is the federal recapture tax limits.

We estimate that 97% of borrowers will not be subject to the Recapture Tax.

Disclosures MCC CAN’T reduce your Federal Income Tax if you don’t owe any taxes!

ADFA or any associate representing ADFA are not tax professionals and cannot give tax

advice. ADFA recommends that borrowers seek the advice of a qualified tax professional when

deciding whether or not to take advantage of an MCC. For more information regarding this

provision, please contact the IRS or consult a tax professional.

Note: ADFA will not reimburse MCC borrower’s that are required to pay the Recapture Tax.

Miscellaneous The information contained herein (including but not limited to any description of ADFA programs and

products, eligibility criteria, interest rates, fees and all other loan terms) is subject to change without

notice. Participants are responsible to find the latest information and guidelines.

(The information contained in this product description does not modify, replace or substitute infor-

mation in the Freddie Mac Selling and Loan Product Advisor Guides and or related release notes or

supplements. Always check for Freddie Mac, ServiSolutions or ADFA announcements and updates

for current underwriting guidelines, changes and/or updates).

“MORTGAGE CREDIT CERTIFICATE”“MORTGAGE CREDIT CERTIFICATE”

ADFA Mortgage Credit Certificate

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ARKANSAS DEVELOPMENT FINANCE AUTHORITY

AFFORDABLE INCOME SUBSIDY GRANT

AREA MEDIAN INCOME LIMITS BY FREDDIE MAC (2018)

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ARKANSAS DEVELOPMENT FINANCE AUTHORITY

AFFORDABLE INCOME SUBSIDY GRANT

AREA MEDIAN INCOME LIMITS BY FREDDIE MAC (2018)